Fibonacci Retracements & Extension

Fibonacci lines are a  technical indicator devised from a ratio discovered by Leonardo Fibonacci.

The lines, when displayed on a trading chart, give support and resistance levels for a stock.

Fibonacci retracements measure the withdrawals  within a trend, while Fibonacci extensions are used to  establish profit targets or estimate how far a price may travel after a retracement/pullback is finished.The ratio is determined by adding numbers in a sequence, 0, 1, 1, 2, 3, 5, 8, 13, 21. The ratios themselves are based on something called the Golden Ratio. The Golden Ratio, 1.618 is derived by dividing any no. in the series by the previous number (21/13).